Public Bill Committee

[Frank Cook in the Chair]

Frank Cook: Good afternoon. Before we begin our consideration of the Bill, I have a preliminary announcement. Members may remove their outer garments to ensure more comfort if they wish. Will all Members please ensure that they are rigged for silent running, or switch their pagers and telephones off altogether, so that we do not have disturbances? There are no amendments to the Bill, so we will move straight to clause stand part debates on each clause, if the Committee wishes to debate them at all.

Clause 1

Registration of societies as co-operative or community benefit societies

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: It is a pleasure to serve under your chairmanship once again, Mr. Cook. I am pleased that we have been able to encourage such a distinguished group to be members of the Committee. The members are known for not only their intelligence, but, on occasion, their brevity.
The purpose of the Bill is to modernise and update the law for industrial and provident societies by changing their name, by improving their corporate governance, and by giving the Treasury the power to modify certain aspects of the law for co-operative societies and community benefit societies in line with company law. In addition, certain aspects of the law for credit unions will be modified in line with building societies law. This follows extensive consultations with the industry.
As you have mentioned, Mr. Cook, no amendments have been tabled, which reflects the fact that we had a very through and good debate on Second Reading that was characterised, as on so many recent occasions, by consensus on both sides of the House. Although the Committee will determine the form of the detailed scrutiny that the Bill is given, all things being equal there is no reason why the Committee should require a subsequent sitting, although time will tell.
Clause 1 provides that all new societies registered under the Industrial and Provident Societies Act 1965 shall be registered as co-operative societies or community benefit societies. It sets out the basis on which societies may be registered. The criteria are essentially those already in existing legislation, so no major change is made to the qualifying criteria. The introduction of the requirement will also ensure that such societies can be properly supervised by the Financial Services Authority, thus improving corporate governance over the sector. By modernising the name from industrial and provident society to terms that are in common usage, we can help the sector adopt a modern, 21st-century persona.
The clause deals with the treatment of those societies already registered, or treated as registered, at present. Such societies did not have to register as a particular type of society. A pre-2009 Act society is not to be affected by the definitions of co-operative society or community benefit society in the Bill. The clause also makes consequential amendments to other legislation to reflect the changes made to the 1965 Act. Amendments are also made to section 16 of the 1965 Act, which deals with circumstances in which a societys registration may be cancelled, to reflect the new registration provisions. The FSA, as registrar, will be able to cancel the registration of a society where it does not meet the new statutory definitions. Again, the status of societies registered, or treated as registered, under old section 1 of the 1965 Act is catered for.

Question put and agreed to.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2

Re-naming of Industrial and Provident Societies Acts

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: I must seek to stir up some controversy but, unfortunately, clause 2 might not do that. It will simply change the name of the Industrial and Provident Society Act 1965 and other Acts concerning industrial and provident societies so that Industrial and Provident Societies is replaced by Co-operative and Community Benefit Societies and Credit Unions in the titles.

Question put and agreed to.

Clause 2 accordingly ordered to stand part of the Bill.

Clause 3 ordered to stand part of the Bill.

Frank Cook: Does the right hon. Gentleman wish clause 4 to be decided formally?

Malcolm Wicks: Clause 4s can be controversial, but not on this occasion, so I should like to proceed formally.

Clause 4 ordered to stand part of the Bill.

Clause 5

Power to make provision corresponding to provision applying to building societies

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Clause 5 is particularly important because it enables provisions corresponding to building society law to be made for credit unions, which I know have broad support in House, not least at this difficult financial time.
The power will allow any provisions of building societies legislation that are deemed appropriate to be mirrored for credit unions. There has been a significant expansion in credit union membership in recent years, includingI declare an interestin my own Croydon credit union. The best way to allow credit union law to keep pace with credit unions expanding membership and operations is to bring it in line with building society law, which is tailored to deal with issues specific to institutions that accept deposits.
The power is widely drawn to allow any provisions of building society legislation that are deemed appropriate to be mirrored for credit unions, but there are restrictions to ensure that specific provisions of existing credit union law cannot be modified. Thus provisions regarding registration, the use of the name credit union, the general prohibition on deposit taking, amalgamations or transfers of engagements, and conversion of status for a credit union company, are safe. There is a requirement that the Treasury consult such persons as appear appropriate before using the new power.

Mark Hoban: Will the right hon. Gentleman indicate whether draft regulations will be published in respect of the powers given to the Treasury under the Bill?

Malcolm Wicks: I am happy to answer the hon. Gentlemans question, but I am sure that the Minister will be able to give some indication of that, even if there cannot be a chronologically specific indication. This is a matter for the Minister, the Treasury and the Government and not, thankfully, for the ex-Minister.
Depending on which provisions of building society law are converted into credit union law, the Treasury may need to confer powers to make orders, regulations and other subordinate legislation to create criminal offences, and to provide for the charging of fees, but not any charge in the nature of taxation.

Nick Palmer: Does my right hon. Friend have any reservations about creating criminal offences with the Treasury consulting only
such persons as appear to them to be appropriate
in other words on quite a summary basis?

Malcolm Wicks: It is very good of my former Parliamentary Private Secretary to ask me that question. Clearlythe Minister might have a view on thisone has to be careful about such criminal offences and how we consult on them. However, not least given the backdrop of the financial crisis that we have been going through, it is important that law is strong in this area and, if necessary, it should include such offences. I defer to the Government on the details of the consultation.

David Lepper: On a point of order, Mr. Cook. May I place on record my membership of the Sussex credit union before we proceed to a decision on this clause?

Ian Pearson: It is a pleasure to serve under your chairmanship this afternoon, Mr. Cook, for what I imagine will be a brief but important sitting. I congratulate my right hon. Friend the Member for Croydon, North on his Bill, which the Government fully support.
The hon. Member for Fareham asked when the draft regulations would be published. The Treasury intends to consult fully before taking things further. The time scale is not yet set, but it will depend on the speed with which the Bill is enacted. The hon. Gentleman will be aware that we intend to take a legislative reform order through the House shortly, and we want the time scale to be appropriate.
To respond to my hon. Friend the Member for Broxtowe, Treasury consultation always takes place with appropriate people. There was extensive dialogue with the credit union movement and industrial and provident societies before and during the Bills gestation period, and I have every confidence that all whom need to be consulted will be consulted.
I must admit to being something of a linguistic conservative. I do not like the disappearance of words such as industrial and provident societies, just as I did not like the words trade and industry disappearing from the title of a Government Department. However, I am aware that there is a broad consensus that the term is outdated. The earlier clauses attracted no comment from me because they have the Governments full support.

Mark Hoban: May I take the Minister back to my question about the regulations that will be made under the Bill, assuming it passes, and his comments about the LRO for credit unions? Is it fair to say that through a combination of the Bill and the LRO, the Government will implement all steps that they expect to take to modernise the legislative framework for credit unions?

Ian Pearson: We certainly think that the package of measures in the Bill and the Governments proposed legislative reform order will represent a comprehensive update of legislation in this area. The Government will always want to keep matters under review, but we certainly intend that the Bill and the subsequent legislative reform order will represent a major piece of work.

Question put and agreed to.

Clause 5 accordingly ordered to stand part of the Bill.

Frank Cook: If my information is correct, I understand that the right hon. Member for Croydon, North would like to speak to clauses 6 to 8 together. I will permit that, with the Committees agreement, and I will put a separate Question on each clause afterwards.

Malcolm Wicks: May I move all three clauses formally, Sir? [Laughter.]

Nicholas Winterton: On a point of order, Mr. Cook. I know that you were seeking to be helpful. I think that the Bill is very sound, which is one reason why it has all-party support. It also has such support because the promoter of the Bill, the right hon. Member for Croydon, North, is not only experienced and informed, but respected. I am happy to support the Bill.

Frank Cook: What a splendid statement. For the benefit of the record, that was Sir Nicholas Winterton.

Clauses 6 to 8 ordered to stand part of the Bill.

Bill to be reported, without amendment.

Committee rose.